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The GOP's Worst Idea to Fight Poverty? Federal Block Grants to the States

January 10, 2014

Their losing 2012 presidential ticket warned that America is becoming a nation of "makers and takers" as self-identified "victims" seek "free stuff" from their government. In 2013, Republicans in Congress voted to gut food stamps, blocked the extension of jobless benefits to 1.3 million long-term unemployed Americans and supported drug testing for recipients. Now on the losing end of a public debate over raising the minimum wage and unemployment insurance, the GOP's best and brightest marked the 50th anniversary of LBJ's launch of the War on Poverty to declare their own.
Americans can be forgiven their skepticism. After all, whether concerning health care, education or basic safety net programs, the likes of Paul Ryan, Marco Rubio, Eric Cantor and their ilk are offering the same failed formula: slash federal budget and hand over the reduced outlays over to the states to spend as they wish. Yet as night follows day, the certain result is a shredded safety net as federal funds redirected to private companies and religious charities undermine public institutions while failing to assist the very people they intended to help.

Take, for example, this week's "major" poverty speech from Florida Senator and 2016 GOP White House hopeful Marco Rubio. As McClatchy reported Wednesday, "Rubio wants states, not U.S., to lead second wave in war on poverty." Complaining that "federal government is incapable of delivering" what he deems (though not defines) as "innovative and highly targeted solutions," Rubio proclaimed:

Therefore, what I am proposing today is the most fundamental change to how the federal government fights poverty and encourages income mobility since President Johnson first conceived of the War on Poverty fifty years ago. I am proposing that we turn Washington's anti-poverty programs - and the trillions spent on them - over to the states.
Our anti-poverty programs should be replaced with a revenue neutral Flex Fund. We would streamline most of our existing federal anti-poverty funding into one single agency. Then each year, these Flex Funds would be transferred to the states so they can design and fund creative initiatives that address the factors behind inequality of opportunity.

If you think you've seen this movie before, that's because you have. It's called the Paul Ryan budget 95 percent of Republicans in Congress voted for three years in a row. And we know how that movie ends.
The Ryan budget doesn't merely deliver a massive tax cut windfall for the wealthy while reducing Uncle Sam's non-defense, discretionary spending to its lowest share of the economy since the 1950's. Congressman Ryan's blueprint repeals the Affordable Care Act slashes the budget for Medicaid by a third, leaving over 30 million more Americans without health insurance a decade from now. Worse still, Ryan would hand over the shriveled Medicaid dollars in the form of block grants to the states to administer as they see fit.
What would follow for lower income Americans is no mystery. After all, 23 Republican-led states have already refused the expansion of Medicaid, needlessly leaving a "coverage gap" of five million people too "rich" to receive Medicaid and too poor to qualify for federal subsidies. (Making matters worse, red state budgets will nevertheless be savaged as cash-strapped hospitals holding the bag for uncompensated care of the uninsured will require assistance or face closure.)
Today, roughly 60 million poor, elderly and disabled Americans receive Medicaid benefits, with Uncle Sam providing an average of 57 percent of the funds state spend. If you have any doubt what states given block grants to spend according to "local conditions," look no further than Mississippi.

Former Governor and block grant supporter Haley Barbour protested that "we have people pull up at the pharmacy window in a BMW and say they can't afford their co-payment." As the Washington Post reported, that seems unlikely:

Mississippi provides some of the lowest Medicaid benefits to working adults in the nation. A parent who isn't working can qualify only if annual family income is less than 24 percent of the poverty line. Working parents qualify only if they make no more than 44 percent of the federal poverty level. Seniors and people with disabilities are eligible with income at 80 percent of the poverty line...
Translated from the federal poverty guidelines, that means a working Mississippi couple with one child could earn no more than $8,150 a year and still qualify for Medicaid, seniors and people with disabilities could earn no more than $8,700, and a pregnant woman could earn no more than $20,000 a year.

We also know what would happen after the Republicans' turned Medicaid into a system of block grants for the state by looking at what they did before the Affordable Care Act's expansion went into effect. As Ezra Klein detailed in 2011, "Twenty states implemented benefit restrictions in the past year. In fiscal year 2010, 39 states implemented Medicaid provider rate cuts or freezes (up from 33 in fiscal year 2009), and 37 states have provider rate restrictions planned for the next fiscal year." Or as Jonathan Cohn put it:

That's not to say plenty of governors wouldn't take advantage of block grant status to change their Medicaid programs in ways they cannot now. They surely would--by capping enrollment, thinning benefits, increasing co-payments, and so on.

For most states, Medicaid is the second largest item in their budgets. Education is first. Imagine, then, what Republican governors would do with those federal dollars, too.
House Majority Leader Eric Cantor offered an answer this week. Appearing at a Brookings Institution event in Washington, Cantor proposed diverting the federal government's 10 percent share of K12 education spending to vouchers for parents to spend on the public, private, parochial school of their choice. At Brookings, he endorsed the so-called Student Success Act:

Now this act will help expand education opportunity by providing incentives for states to replicate high-quality charter schools. The bill requires that school systems provide parents access to information about the performance of their local schools. Parents can then actually hold schools accountable for the quality of education that their children receive.
The Student Success Act also includes an amendment that Russ talked about, that I authored, that, for the first time, does allow federal funds to follow Title I kids -- for the first time. And this ensures that the priority remains what is best for those children and their families, no one else's priorities.

Of course, for Republicans the "School Choice" movement is all about someone else's priorities. That someone is the GOP and its social conservative allies determined to undermine public schools (and their teachers' unions) by redirecting education dollars to religious and other private schools. During the 2012 presidential race, Republican nominee Mitt Romney made it a pillar of his campaign.
Governor Romney was an advocate of so-called "school choice" since his first run for the White House. In 2007, Romney suggested American parents should not only be encouraged to abandon the public schools; they should be rewarded for it with a tax break for home schooling their kids. In 2012, as the Republican nominee outlined in a speech to the U.S. Chamber of Commerce, Romney wanted to siphon $25 billion from two federal programs into a new voucher scheme. As the New York Times reported:

As president, Mr. Romney would seek to overhaul the federal government's largest programs for kindergarten through 12th grade into a voucherlike system. Students would be free to use $25 billion in federal money to attend any school they choose -- public, charter, online or private -- a system, he said, that would introduce marketplace dynamics into education to drive academic gains.

What Romney and Cantor would like to see on a national scale is already underway in several GOP-led states. But as the As the frightening results in states like Indiana, Georgia, Arizona and most of all Bobby Jindal's Louisiana show, the Romney-Cantor voucher dream is fast becoming an American horror story.
The Louisiana experience suggests that the Republican voucher system would instead introduce large quantities of public cash into the coffers of religious schools and academies whose educational credentials may be suspect at best. There, voucher-receiving institutions must be blessed by the state. As the Daily Kingfish noted in 2012, over 90 percent of the 115 schools qualifying for Jindal's $8.500 voucher are religious institutions. And as Reuters documented, many of the 7,450 slots reserved for voucher students are at some pretty suspect schools:

The school willing to accept the most voucher students -- 314 -- is New Living Word in Ruston, which has a top-ranked basketball team but no library. Students spend most of the day watching TVs in bare-bones classrooms. Each lesson consists of an instructional DVD that intersperses Biblical verses with subjects such chemistry or composition.
The Upperroom Bible Church Academy in New Orleans, a bunker-like building with no windows or playground, also has plenty of slots open. It seeks to bring in 214 voucher students, worth up to $1.8 million in state funding.
At Eternity Christian Academy in Westlake, pastor-turned-principal Marie Carrier hopes to secure extra space to enroll 135 voucher students, though she now has room for just a few dozen. Her first- through eighth-grade students sit in cubicles for much of the day and move at their own pace through Christian workbooks, such as a beginning science text that explains "what God made" on each of the six days of creation. They are not exposed to the theory of evolution.
"We try to stay away from all those things that might confuse our children," Carrier said.

In Georgia, as the New York Times documented in 2012, the story is much the same:

Most of the private schools are religious. Nearly a quarter of the participating schools in Georgia require families to make a profession of religious faith, according to their Web sites. Many of those schools adhere to a fundamentalist brand of Christianity. A commonly used sixth-grade science text retells the creation story contained in Genesis, omitting any other explanation. An economics book used in some high schools holds that the Antichrist -- a world ruler predicted in the New Testament -- will one day control what is bought and sold.

Of course, what is being bought and sold is our children's future. According to the Alliance for School Choice, in 2012 alone eight states had "programs [which] redirected nearly $350 million that would have gone into public budgets to pay for private school scholarships for 129,000 students." Republican ideology notwithstanding, education is not (or at least, shouldn't be) a free-market where parents purchase a product called test scores. But if it were, it would be a case of market failure. As Stephanie Mencimer pointed out, the dubious performance and questionable financial practices of charter schools has them in hot water with federal investigators. As the Washington Monthly detailed in April 2008, voucher programs in Cleveland and Milwaukee failed to produce better performance in the private versus public schools. (70 percent of students in the Milwaukee program attend religious institutions.) As the American Prospect reported in 2011:

In Milwaukee, home of the oldest city voucher program in the country, researchers are in the middle of the five-year study of the program that is expected to shed light on the potential of voucher programs. But three years into the study, results are unimpressive. High school graduation and college enrollment are up 5 percent to 7 percent among voucher recipients, but overall performance between public school and voucher recipient cohorts is virtually the same.

It's no wonder Christopher Lubienski, an education professor at the University of Illinois, concluded that the GOP "is on poor empirical ground in making a claim based on competitive effect."
As it turns out, GOP thought leaders like Paul Ryan, Eric Cantor, Rand Paul and Marco Rubio are on poor empirical ground in advocating federal block grants to the states as strategy for winning a new Republican war on poverty. While the supposed beneficiaries of their schemes and the public institutions which today serve them would suffer, red states would reap a windfall. (Just ask Sam Brownback of Kansas, where education spending is now 16 percent less than in 2008.) After all, thanks to the enduring dynamic of "red state socialism," their coffers would grow courtesy of the blue state taxpayers who disproportionately pick up the tab.


Jon Perr
Jon Perr is a technology marketing consultant and product strategist who writes about American politics and public policy.

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